You purchase one ONB March 200 put contract for a put premium of $6. What is the maximum profit that you could gain from this strategy?
A) $20,000
B) $20,600
C) $19,400
D) $19,000

Question

Quizplus · Accepted Answer

The maximum profit from a put option is achieved if the stock price goes to $0. Since the strike price is $200 and you pay a $6 premium, the maximum profit is (200 - 6) * 100 = $19,400, because each contract represents 100 shares.

You Purchase One ONB March 200 Put Contract for a Put